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The Nature of ValueHow to Invest in the Adaptive Economy$
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Nick Gogerty

Print publication date: 2014

Print ISBN-13: 9780231162449

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162449.001.0001

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Managing Moats, for Value Creation Today and Wealth Tomorrow

Managing Moats, for Value Creation Today and Wealth Tomorrow

(p.206) Chapter Twelve Managing Moats, for Value Creation Today and Wealth Tomorrow
The Nature of Value

Nick Gogerty

Columbia University Press

This chapter discusses the management of moated firms and how to allocate capital to promote moat health and longevity. Responsible moat management is mostly playing defense and overseeing organizational plumbing. It requires a craftsman-like focus on process excellence, and an understanding of cluster constraints and capacities. Moat managing is more like a stewardship farming relationship than a pioneering adventure, as it involves repeatedly harvesting familiar customer territory. Good managers recognize that playing the quarterly earnings game with smoothed numbers to reduce earnings volatility does not enhance long-term intrinsic value. Ethics are also integral to managing moats and attaining success. These ethics include truthfulness about the required return on capital and truthfulness with workers, investors, and customers.

Keywords:   moats, moated firms, management, capital allocation, investment

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